FXCM/DailyFX Signals and Strategies

Hi Jason

I am with FXCM, I have just opened my platform and see a huge gap (approx 70 pips) on my 5 min chart , time 13.05-14.40. Did the system go down?

Regards
Mike

Sorry, on the GBPUSD

Hi Mike,

There's a tech issue with those charts that will be resolved during this weekend's maintenance. I have posted more information on this in the FXCM Discussion thread. I apologize for the inconvenience.

Jason

Hi Everyone,

Most of you are already aware of the Dow Jones FXCM Dollar Index which tracks the value of the US Dollar against 4 major currencies. David Rodriguez, Quantitative Strategist at DailyFX.com has done some interesting studies on the correlation between the US Dollar and stock. Below is an excerpt of his article:

The S&P 500 Volatility Index (VIX) reflects volatility expectations on the benchmark US equity index, and high values are most often associated with fear of significant declines. The Dow Jones FXCM Dollar Index is, in our opinion, the best metric for the US Dollar’s value against major currency counterparts. View the methodology behind the USDOLLAR.

Forex Correlations Summary

View forex correlations to the SPDR Gold ETF Trust (GLD), United States Oil Fund ETF (USO), SPDR Dow Jones Industrial Average ETF Trust (DIA), UK FTSE 100 Index, and IShares Silver Trust ETF (SLV) prices.

http://img577.imageshack.us/img577/7...ns2012july.png

The extremely strong link between the Dollar Index and the VIX emphasizes that forecasts for the US currency will depend on moves in broader markets. Correlations show that a higher VIX coincides with a higher Dollar; we may need to wait for the next bout of significant financial market risk aversion to see a significant break higher in the US Dollar.

--- Read the full article at DailyFX.com

Hi Everyone,

Today's readings from the Speculative Sentiment Index (SSI) point to the possibility of future declines in the dollar. Here's an excerpt from the analysis by David Rodriguez, Quantitative Strategist at DailyFX.com

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Technical analysis studies aside, recent shifts in retail trader sentiment warns that the US currency may indeed have further room to fall. Our proprietary Speculative Sentiment Index data shows that there are 1.2 traders long EURUSD for every one long. Yet long positions have fallen 15 percent since last week while shorts are up 19 percent. An SSI flip to net-short EURUSD would give clear contrarian signal that the Euro may have set an important bottom....

--- Click here to read to the full article at DailyFX.com

Hi Everyone,

It hasn't been a good week for the Eurozone. Spain's heavily indebted Valencia region asked for financial aid, increasing investor fears that the Spanish government will seek a full-blown bailout. Spain's IBEX stock index fell 5.8 percent on Friday, which is it's biggest one-day drop in 2 years, and global stocks the Euro fell along with it.

What's in store for the single currency for the new week? Below is an excerpt from a preview by David Song, Currency Analyst at DailyFX.com:

Fundamental Forecast for the Euro: Bearish


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As we’re expecting to see a slew of dismal developments next week, we should see the downward trend from 2011 continue to take shape, and the drop in risk sentiment should produce fresh yearly lows in the EURUSD as European policy makers struggle to restore investor confidence. In turn, we may see the euro-dollar make a run at the 1.2000 figure to test for psychological support, but we will be keeping a close eye on the relative strength index as it approaches oversold territory....

Read the full article at DailyFX.com

Have a great weekend!

Jason

Hi Everyone,

Today's post is about trading crosses, which are currency pairs in which neither of the two currencies is the US Dollar. Currency crosses can be particularly conducive to long term trends. Below is an excerpt from article today by Walker England, Trading Instructor at DailyFX.com:

Today we will specifically be comparing the EURJPY and AUDJPY currency pairs to see the advantages of trading Euro crosses in present market conditions.

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Strength Of Trend

Regardless of your trading strategy, it is important to evaluate the direction of the trend. Above we have daily charts for both the EURJPY and AUDJPY. Looking at the EURJPY we can see the pair is working on creating new lows under 94.46, and declined as much as 1716 pip through present prices. On the other hand the AUDJPY has declined as much as 1417 pips through the same time frame, but has not established a new low in over 6 weeks. Both pairs are trending lower from their 2012 highs in March, that much is clear but we can see that momentum is clearly on the side of the EURJPY.

With the EURJPY making lower lows and having a stronger trend, which pair would you prefer to be trading?

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Rollover Rates

Strength of trend is not the only consideration we should take into account when opening a position. Every good trader will always keep their eye specifically on costs that can eat into potential profits. Rollover is one of those factors, and can either work in your favor or against it....

Real the full article at DailyFX.com

Jason

Hi Everyone,

The Euro, the US stock market and other “risk on” trades got a boost today from the economic trifecta of lower jobless claims and higher durable goods orders in the US, and strong statements by ECB President Mario Draghi that the central bank will do whatever it takes to preserve the Euro. The big question is whether the recent rally in the Euro and other major currencies versus the US dollar has legs. According to the latest readings of the Speculative Sentiment Index (SSI)… possibly. Below is an excerpt from this morning’s report by David Rodriguez, Quantitative Strategist at DailyFX.com:

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Forex trading crowds have aggressively bought into US Dollar (ticker: USDOLLAR) declines against the Euro, and our sentiment-based trading strategies are now short USD and call for further EURUSD gains. Our sentiment-based trading strategies are now long Euros and short US Dollar against the Japanese Yen, Swiss Franc, Australian Dollar, New Zealand Dollar, and Canadian Dollar. It will be critical to watch whether...

Real the full article at DailyFX.com

Hi Everyone,

If you think this week's EUR/USD was exciting, just wait until next week when we have Non-Farm Payoll, Chinese data, ISM, and ECB, BOE, and FOMC rate decisions. You won't want to miss it. Below is a snapshot of next week's important economic events. Click here for the full calendar.

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Watch our analysts cover these events as they happen in the Live Trading Room at DailyFX.com. Hope to see you there!

Jason

Hi Everyone,

Last week ended with a surge in "risk on" trades in global markets including the Euro and US stocks. The Dow blasted through the 13000 mark, a level not seen since May of 2007. The reason for the recent bullishness? Expectations that the Fed and the ECB will provide more stimulus to the markets. This week, we will see if the central banks deliver with the Fed announcement on Wednesday at 18:15 GMT, and the ECB announcement on Thursday at 11:45 GMT.

In the video below John Kicklighter, Senior Currency Strategist at DailyFX.com previews the week ahead for us and highlights what to look for from the two central bank announcements and the employment report on Friday. "One thing is clear, next week will be defined by volatility and speculation."

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Jason

Hi Everyone,

We have 3 busy days ahead of us with the FOMC announcement on Wednesday, the ECB announcement on Thursday, and Non-Farm Payrolls on Friday. I thought I would use today to address a skill that is absolutely essential to becoming a successful trader: How to Manage Losing Trades. I want to share with you an excerpt from an article written by James Stanley, Trading Instructor at DailyFX.com:

If there is one feeling that traders universally abhor, it would probably be the emotion derived from watching a losing trade turn deeper, and deeper against them. At this specific point in time – you are watching yourself getting poorer; the complete antithesis of why you trade. If the trade is left unchecked, things can get really ugly very fast. An overleveraged position can lead to an outsized loss; and as a position can move against you for an extended amount of time, these losses can irreparably damage futures.

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Read the full article at DailyFX.com

Hi Everyone,

This afternoon traders will be listening intently for comments from the FOMC announcement. Here's an excerpt of an article by Ilya Spivak, Currency Strategist at DailyFX.com highlighting the main items to watch for:

Talking Points

 

1. Haven Currencies Fall as Risk Appetite Firms on FOMC Stimulus Hopes
2. US Dollar Likely to Recover as Fed Disappoints Hopes for Additional QE

The safe-haven US Dollar and Japanese Yen pushed lower and S&P 500 stock index futures rose overnight amid hopes the Federal Reserve will announce additional stimulus measures at the monthly meeting of the rate-setting FOMC committee. A disappointment seems likely however, with Ben Bernanke and company opting not to stray from familiar territory. Such an outcome is likely to weigh on risk appetite, boosting the greenback and punishing its stocks-linked counterparts....

Read the full article at DailyFX.com

Hi Everyone,

It was an up and down morning for the Euro as first markets were encouraged that the ECB held rates at 0.75% but then discouraged when ECB head Mario Draghi made it clear that no new bond buying measures will be in place in the near term. This would be a good time to check in on the latest SSI readings on DailyFX.com to gauge market sentiment going into Friday's Non-Farm Payrolls.

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Forex trading crowds have aggressively faded the US Dollar (ticker: USDOLLAR) declines against the Euro, and our sentiment-based trading strategies are now long USD and call for new EURUSD loses. It remains to be seen if the EURUSD holds the July low at 1.2040/45, which we expect to break now that...

Read the full article at DailyFX.com

Hi Everyone,

Today I wanted to share a video with you by Christopher Vecchio, Currency Analyst at DailyFX.com. In this video, he discusses the today's Non-Farm Payrolls, and how the US Dollar will perform against the Australian Dollar, the Euro, and the Japanese Yen.

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Have a great weekend!

Jason

Hi Everyone,

Last week the ECB and Fed made their rate announcements, and the Non-Farm Payroll numbers were released. This week the focus shifts to the Asia Pacific. At 00:30 EDT tonight, it's the Reserve Bank of Australia's turn to announce its rate decision. David Song, Currency Analyst provides this preview on what to expect:

Although the Reserve Bank of Australia is widely anticipated to keep the cash rate at 3.50%, the fresh batch of central bank rhetoric is likely to spark increased volatility in the AUDUSD as market participants weigh the outlook for monetary policy...

Potential Price Targets For The Rate Decision

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How To Trade This Event Risk

Trading the rate decision may not be as clear cut as some of our previous traders as the RBA is widely expected to keep the benchmark interest rate on hold, but a less dovish statement could set the stage for a long Australian dollar trade as market participants scale back bets for more easing. Therefore, if the central bank turns more upbeat towards the $1T economy, we will need to see a green, five-minute candle following the announcement to generate a buy entry on two-lots of AUDUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion...

Read the full article at DailyFX.com

Jason

Hi Everyone,

Yesterday, I mentioned that the focus this week will be on the Asia-Pacific region. Today, I wanted to share with you a trade setup to scalp AUD/USD. Below is an excerpt of details on this trade idea from Michael Boutros, Currency Strategist at DailyFX.com:

The Australian dollar seems poised for a correction lower after posting an impressive 10.6% rally off the June 1st lows at 9582, with price action now retracing 78.6% of the entire decline off the 2012 highs made in late February. AUDUSD options show that 3-month volatility expectations have fallen below the 10% threshold for only the third time since 2008, suggesting that a near-term top may now be in place. The proximity to our topside limit at the 1.06-figure offers favorable risk-reward on aussie shorts with clearly defined downside targets now in view.

AUDUSD Daily Chart

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Read the full article at DailyFX.com

Hi Everyone,

Today I wanted to share a video recording of this morning's Live Scalping Webinar by Michael Boutros, Currency Strategist at DailyFX.com. In this video, he shares his insights regarding opportunities to trade the Euro and Pound including his current trade setups.

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Join Michael every Wednesday morning for his Live Scalping Webinar on DailyFXplus.com (Exclusive for Live Clients Only) at 1400 GMT (10ET)

Jason

Hi Everyone,

It's Thursday which means our research team has published its weekly update of the Speculative Sentiment Index (SSI) on DailyFX.com. Below is an excerpt of from Quantitative Strategist David Rodriguez's analysis of the latest readings from the index which point to further drops in the Euro:

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Forex trading crowds have aggressively sold into overnight US Dollar (ticker: USDOLLAR) strength against the Euro and other major currencies, and the shift in sentiment suggests the EURUSD may have topped at $1.2440. Timing major currency turnarounds is always especially difficult, but a recent shift towards retail crowd EURUSD buying gives us contrarian signal that the Euro may trade towards fresh lows...

Read the full article at DailyFX.com

Hi Everyone,

Today ends a relatively quiet week in the markets, and many analysts have been using one word to characterize the current low volatility environment: complacency. In the article I want to share with you today, Jamie Saettele, Senior Technical Strategist at DailyFX.com discusses the implications on the US dollar:

You may have heard ‘complacency’ thrown around recently with respect to the current low volatility environment. The next 4 charts highlight this phenomenon. Capital markets underwent a major shift in volatility in 2007 and 2008. Simply, market volatility (uncertainty) increased and registered extreme levels in October 2008. Volatility has reverted to 2007-2008 levels. Is this another shift? Are we in for an extended period of low volatility or does this decline in volatility serve to correct a ‘bull market in volatility (uncertainty)’ before the next wave of high volatility? Viewed in the context of price pattern and other technical considerations such as momentum and sentiment, markets are on the cusp on an explosion in volatility. The implications are USD bullish and ‘risk’ bearish but trades must be structured with risk as the primary consideration. Conviction in an idea might be high but what could happen doesn’t mean it will happen.

How to Read These Charts:

-Black lines are plots of weekly close for the specific currency pair
-Green lines are 1 week volatility
-Blue lines are 1 month volatility
-Dark Red lines are 3 month volatility
-Red lines are 1 year volatility
-Red dots indicate that that week’s volatility was equal to or lower than this week’s volatility AND that this week’s volatility was the lowest so far this year

EURUSD
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Read the full article at DailyFX.com

Hi Everyone,

Today the Dow and S&P finally snapped at 6-day winning streak albeit slightly, as volumes and volatility continue to remain low in global markets. As we have discussed in the past, gains in the equity markets have a high degree of correlation with other "risk on" trades in the currency markets such as the buying the Euro and Australian dollar. In the article I want to share with you today, John Kicklighter, Senior Currency Strategist at DailyFX.com looks at a few other important correlations between stocks and currencies in regards to volatility and what that can mean for currency trades going forward particularly with AUD:

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Here we have both the VIX Volatility Index and the volume reading for the S&P 500 Index. Whether it is a rebound in volatility that stirs volume or vice versa, the correlation is clear. What makes the presence circumstances more unique than what we see in this limited look-back period is that this is the lowest non-holiday volume reading since before the Great Recession and financial crisis. With the knowledge that activity levels are at extremes and more likely to revert with each day that passes; it is worth establishing the likely direction that results from that rebound in activity...

Read the full article at DailyFX.com